Dollars in Guatemala

The financial system in Guatemala

In order to increase competitiveness and efficiency, several reforms have been introduced since 1989. Nevertheless, the financial system remains incipient in relation to the markets of developed countries, including some latin american markets such as Mexico, Argentina and Brazil. Even though lately there has been an accelerated growth in the financial institutions (the number of banks increased from 23 in 1991 to 33 in 1996, and stock exchange transactions increased 75% a year), specialization in finances has been slack.

Guatemala in international financial markets

Guatemala has participated increasingly in international markets. Parallel to the growth in commercial transactions, there has been an increase in financial transactions. According to the money exchange, US$6,754.7 million entered in 1996, and US$6,550.0 million went out. Of the total transactions carried out, more than 52% was due to movement of capital, 37% was due to import and export of goods, and 11% to payments for services. According to the Monetary Law, all exchange done by guatemalans belonged to the Government of Guatemala, a legal situation known as "concentration of foreign exchange".

Consequences of the concentration of foreign exchange

During the 80's, monetary authorities made great efforts to apply the principle of foreign exchange concentration. They have abandoned such policy during the last years and have, since 1993, allowed the opening of stock exchange. The use of currency exchange, specially dollars, is more and more evident in diverse commercial activities. Since 1994 there exists a project in Congress to reform the Monetary Law and eliminate the concentration of foreign exchange. It is important to de-concentrate foreign exchange in order to achieve an integral reform of the financial system. Such a reform would greatly benefit guatemalans, specifically by giving them a legal certainty in the transactions they carry out in international currency, and by reducing the costs of the said transactions. With this reform, businessmen not only will freely dispose of their dollars, certain that they will not be taken away from them (as happened in other times), but also simple activities such as having access to an account in dollars will be as safe as having one in "quetzales".